Publix may be about to meet its match: Wegmans

AUTHOR

Jeff Wells@JeffWellsWH

PUBLISHED

March 8, 2017

Dive Brief:

• According to an SEC filing, Publix has increased its capital expenditures forecast to $1.85 billion for this year, up from $1.4 billion last year, according to Retail Leader.
• The company recently announced it will expand into Virginia, with 12 stores slated to open in Richmond in a few years’ time. The company also plans to open more stores in North Carolina, where it first entered the market in 2014.
• The capital expenditure increase follows fourth-quarter results that saw Publix’s revenue jump 11% to $9.1 billion. Same-store sales for the chain grew 1.9% in 2016, down from 4.2% in 2015. 

Dive Insight:

Publix has spent a lot of time and money becoming a customer favorite in the southeastern U.S. Now it wants to expand its appeal along the eastern seaboard with a new crop of store openings in North Carolina and Virginia.

The company has its work cut out for it. For years, Publix focused on building stores in its core market of Florida, where its name is well known to shoppers. As Tom Jackson, executive director of the Florida Grocer Association, recently told the Tampa Bay Times, “We have this saying that we all live near a Publix in Florida." With its northward expansion, however, the company faces the challenge of winning over shoppers that aren't familiar with the brand. And it must do so while competing with the likes of Harris Teeter, Wegmans, and Ingles — retailers that excel in many of the same areas where Publix thrives.

The company won’t be casually strolling into new markets, however. In Virginia, Publix’s first new-state venture in three years, it plans to quickly build 12 stores in the Richmond area. This should solidify Publix’s positioning in what’s become one of the most competitive cities for grocery on the East Coast, and give it a good foundation for further expansion within the state.

In North Carolina, Publix plans to add 20 stores to its existing count of 16. The Raleigh-Durham area, known as the “Research Triangle,” is particularly coveted territory. But as in Virginia, Publix will face stiff competition from longtime favorites like Harris Teeter and a surging Food Lion. It will also, as in Virginia, face off against Wegmans, which recently secured its first store sites in the Tar Heel state.

In Wegmans, Publix may face its greatest challenge. Both stores enjoy intense customer loyalty, are renowned for their fresh capabilities and prepared foods, and are tops at execution. Indeed, there’s a captivating symmetry to the way the two retailers are finally meeting after years of expanding from opposite corners of the country — Wegmans from the northeast, Publix from the southeast.

At this point, it’s not clear which store will have the upper hand. The only thing certain is that it will be a competition everyone in the grocery industry will be watching.